Headline editors had their work cut out for them the first three months of 2022. The largest event being, of course, Russia’s invasion of neighbor Ukraine prompting the Western powers to cut Russia out of the global financial system. In response, Russia floated the idea of settling oil contracts in other currencies, including Bitcoin.

For mining, oil giant Exxon announced a partnership with Crusoe Energy to mine Bitcoin using excess natural gas, Intel released information on its new ASIC chip and the EU considered banning Proof-of-Work mining. The network itself, on the other hand, had a fairly casual quarter. Hashrate continues to accumulate, raising difficulty and lowering profit projections.

Difficulty and hashprice

Bitcoin’s difficulty rose 17% in Q1, cutting mining profits despite a 32% price rise from its local bottom of $33,000 in January 2020, according to Messari.

  • Hashrate rose 11%, from an estimated 180 EH/s to 200 EH/s, according to YCharts.
  • Bitcoin experienced two consecutive negative difficulty adjustments, mirroring Bitcoin’s choppy sideways price action

Hashprice – the amount of revenue one unit of hashrate (TH) can earn at different efficiency values –  remained fairly static throughout Q1’s seven difficulty adjustments, according to Hashrate Index. Hashprice shed $0.02 over the last three months, dropping from a high of $0.22 in January to $0.20 by March’s close.

USD Revenue vs. Difficulty Change shows Bitcoin’s total difficulty changes in relation to hashprice. Coin Metrics recently joined the Compass Podcast to discuss the metric, a useful tool for miner’s analyzing future profitability.

Public mining market

Mining stocks offer alternative exposure to Bitcoin and Bitcoin mining. In 2021, mining stocks paid off big time. In recent months, however, Bitcoin has outperformed mining stocks by as much as 28%.

Out of the top performing mining companies, Cleanspark and Cathedra are both positive year to date at 17% and 11.6%, respectively

For all the headlines, little contagion has spread into mining markets. Hashrate continues to be deployed, albeit at a slower pace as demonstrated by the two negative difficulty adjustments.